WEBVTT - Morgan Stanley Wealth Shift, Markets Momentum 0:00:02.520 --> 0:00:10.280 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.280 --> 0:00:13.440 Week Insight from the reporters and editors that bring you 0:00:13.480 --> 0:00:18.400 America's most trusted business magazine, plus global business, finance and 0:00:18.480 --> 0:00:22.880 tech news. The Bloomberg Business Week Podcast with Carol Masser 0:00:23.079 --> 0:00:25.840 and Tim Stenebeck on Bloomberg Radio. 0:00:26.960 --> 0:00:29.320 Now, let's get to today's. 0:00:28.520 --> 0:00:31.480 Second drop of some big bank earnings another round along 0:00:31.480 --> 0:00:34.080 with business updates from the Wall Street banks. We got 0:00:34.159 --> 0:00:37.760 today Morgan Stanley and Bank of America BAA shares we've 0:00:37.800 --> 0:00:40.520 seen them trade slightly lowered despite fourth quarter profit beat 0:00:40.600 --> 0:00:43.600 due to high investment banking fees and strong net interest income. 0:00:43.640 --> 0:00:46.120 And then Tim Morgan Stanley shares, we've seen them take 0:00:46.159 --> 0:00:48.520 off rallying, following in the steps of what we saw 0:00:48.520 --> 0:00:51.840 in terms of share moves by Goldwyn, JP, Morgan and City. 0:00:51.880 --> 0:00:55.560 They reported yesterday Morgan Stanley fourth quarter profit more than doubling, 0:00:55.680 --> 0:00:59.000 driven by strong trading revenue due to US election volatility. 0:00:59.160 --> 0:01:01.400 Here with the details on today's big bank results, we 0:01:01.400 --> 0:01:05.240 got Bloomberg Intelligence Senior Global Banks analyst Alison Williams here 0:01:05.280 --> 0:01:09.880 in the Bloomberg BusinessWeek Studio. Alison, Bank of America A 0:01:09.880 --> 0:01:12.640 little preview for the clothes right now is going to 0:01:12.680 --> 0:01:15.240 be one of my decliners today. Why are shares lower? 0:01:15.360 --> 0:01:18.600 I mean, you know that yesterday I think was when 0:01:18.720 --> 0:01:21.360 there was a readjustment in terms of, you know, we 0:01:21.959 --> 0:01:24.760 got the we got the results yesterday, we had strong numbers, 0:01:24.800 --> 0:01:27.920 and I think Bank of America did deliver, right, they 0:01:27.959 --> 0:01:31.399 delivered on that an interest income upside. The outlook is good, 0:01:31.440 --> 0:01:33.040 the outlook for costs is good. They're going to have 0:01:33.120 --> 0:01:37.959 operating leverage. But potentially wasn't the same magnitude. 0:01:37.480 --> 0:01:39.760 Is it because they were already up three percent yesterday? 0:01:39.800 --> 0:01:41.920 Yeah, I mean I think yeah. So I think yesterday 0:01:42.120 --> 0:01:45.280 was kind of baking in, you know, an adjustment for 0:01:45.360 --> 0:01:48.120 expectations like, okay, so we've seen this across the banks, 0:01:48.120 --> 0:01:49.840 We're probably going to get it from Bank of America. 0:01:50.520 --> 0:01:52.320 And as I said, they did deliver on it, but 0:01:52.440 --> 0:01:55.600 not necessarily. I mean, the huge upside that we're seeing 0:01:55.600 --> 0:01:58.560 at the capital markets focused Morgan Stanley and Golden Sachs 0:01:58.600 --> 0:02:02.480 for example, and so Bank of America good growth in 0:02:02.520 --> 0:02:05.480 their wealth management business, but we knew that they had 0:02:05.480 --> 0:02:08.000 already talked about that, so that was kind of in line. 0:02:08.680 --> 0:02:12.080 And then you know, trading and revenue, yes, up, but 0:02:12.280 --> 0:02:15.160 not of forty five percent, which is what we saw 0:02:15.280 --> 0:02:18.160 at you know, forty five percent trading growth in Morgan Stanley. 0:02:18.880 --> 0:02:20.639 Yeah, I mean it's the traders, right that seem to 0:02:20.680 --> 0:02:22.680 have really done super super well. I mean, even if 0:02:22.720 --> 0:02:25.120 investment banking fees are up, I mean they're coming from 0:02:25.440 --> 0:02:27.000 I mean, there's still not where they were when they 0:02:27.000 --> 0:02:29.840 were hitting record levels, right, and it's it was pretty anemic, 0:02:30.360 --> 0:02:31.680 like the reference point. 0:02:31.760 --> 0:02:34.480 But to your point, what people are really focused on 0:02:34.600 --> 0:02:39.520 is this investment banking fee recovery. Investors and managements and 0:02:39.639 --> 0:02:42.440 bankers have been looking for it, you know, ever since 0:02:42.480 --> 0:02:45.600 the downturn, and so now we're starting to see things 0:02:45.639 --> 0:02:48.440 pick up. We saw i mean IPOs in the fourth quarter. 0:02:48.600 --> 0:02:51.560 It's really was like a hockey stick. And so, you know, 0:02:51.600 --> 0:02:54.160 the highest level in a few years M and A 0:02:54.280 --> 0:02:57.960 backlog Morgan Stanley saying today it's like the highest and 0:02:58.000 --> 0:03:00.800 you know, ten to fifteen years. Keep in mind that 0:03:00.960 --> 0:03:04.560 M and A feeds into all these other underwriting businesses. 0:03:04.600 --> 0:03:07.160 So so that's something to be excited about. 0:03:07.200 --> 0:03:08.880 Right, you do a deal for a company, you do 0:03:09.000 --> 0:03:09.639 like other businesses. 0:03:09.680 --> 0:03:12.200 I mean, we just had at the start of our broadcast, 0:03:12.280 --> 0:03:16.040 Rio Tinto and Glencore said to discuss a potential combination, you. 0:03:16.000 --> 0:03:19.160 Know, right, and that is, you know, after Trump, we 0:03:19.200 --> 0:03:22.560 saw a sentiment really drive all these banks higher. Part 0:03:22.600 --> 0:03:27.080 of that is less scrutiny and anti trust and so 0:03:27.160 --> 0:03:30.079 that's meaningful, not not for banks merging with each other, 0:03:30.160 --> 0:03:31.920 but for banks advising. 0:03:32.040 --> 0:03:33.000 On more deals. 0:03:33.160 --> 0:03:38.360 And you know, we actually INBI we have a we 0:03:38.400 --> 0:03:42.280 did a deep study led by you know, my my 0:03:42.360 --> 0:03:45.120 colleague Neil Sipes, looking at M and A in the cycle. 0:03:45.200 --> 0:03:48.600 You know, it's a cyclical business, and you know it's 0:03:48.640 --> 0:03:50.960 you can make a really solid argument that we could. 0:03:51.000 --> 0:03:52.600 You know, M and I is a percent of market 0:03:52.640 --> 0:03:56.760 cap reached new lows last year, and you can make 0:03:56.800 --> 0:04:00.680 a caste for that improving just as we said, scrutiny, 0:04:01.240 --> 0:04:04.040 more sentiment as people feel a little bit more confident 0:04:04.120 --> 0:04:07.640 in the economy, you know, the pro growth economy as 0:04:07.760 --> 0:04:11.920 Jamie calls it. And really if you get that improved sentiment, 0:04:11.960 --> 0:04:13.839 you can start to see more and more deals get done. 0:04:13.880 --> 0:04:15.400 What do we learn in them about in the last 0:04:15.440 --> 0:04:17.800 thirty six hours about the way consumers are feeling about 0:04:17.800 --> 0:04:20.200 the economy specifically, you know, Bank of America. We often 0:04:20.240 --> 0:04:22.039 look too, because they have such a good view on 0:04:22.160 --> 0:04:23.720 consumers in the US. 0:04:23.839 --> 0:04:26.600 What did we hear, I mean, we heard good things. 0:04:26.200 --> 0:04:28.840 It's a little hard to tell because the fourth quarter 0:04:29.200 --> 0:04:32.039 is really bolstered by all that holiday spend. 0:04:32.200 --> 0:04:35.640 Yeah, I know, my credit card, I'm confirmed. 0:04:35.680 --> 0:04:36.920 That is confirmed, confirmed. 0:04:39.800 --> 0:04:42.240 And that's why in the first half tends to be 0:04:42.279 --> 0:04:44.679 the weaker part on the credit side, right because people 0:04:44.680 --> 0:04:47.760 are ringing up the bills. There's spending is very strong, 0:04:48.160 --> 0:04:51.280 but then the bills start coming in and so you know, 0:04:51.360 --> 0:04:53.800 the credit trends in that business are not great for 0:04:53.839 --> 0:04:56.200 the first half, but you know, in general, the credit 0:04:56.240 --> 0:04:59.920 picture is good. You know, we haven't talked about credit. 0:05:00.360 --> 0:05:02.279 You didn't see a lot of headlines. That means that 0:05:03.400 --> 0:05:05.680 the stories, good provisions actually coming on a little bit 0:05:05.720 --> 0:05:08.360 better than expected. When we look at reserves, so keep 0:05:08.360 --> 0:05:12.440 in mind, reserves are thinking about the losses ahead, they're 0:05:12.480 --> 0:05:14.800 over the life, but they're also based on you know, 0:05:15.279 --> 0:05:19.359 economic scenarios, capabilities of those economic scenarios, and they're all 0:05:19.880 --> 0:05:23.200 telling us that, you know, next year looks stable and solid. 0:05:23.440 --> 0:05:27.360 What does the you know, kind of financial community, investor 0:05:27.520 --> 0:05:30.120 analyst community, you guys think when it comes to those 0:05:30.120 --> 0:05:33.920 capital ratios. I know there's expectations under Trump that even 0:05:33.960 --> 0:05:36.239 that eases, right, or it doesn't even it doesn't get 0:05:36.279 --> 0:05:37.000 amped up more. 0:05:37.040 --> 0:05:39.359 And so that's why we saw that Trump bump with 0:05:39.480 --> 0:05:39.800 a lot. 0:05:39.760 --> 0:05:42.919 Of these banking names in the last quarter of twenty 0:05:42.960 --> 0:05:46.479 twenty four. What's the view on that in terms of 0:05:47.000 --> 0:05:49.280 oversight and keeping them in check? 0:05:49.480 --> 0:05:54.279 So the viewposts Trump to your point, right, banks shares rally, 0:05:54.360 --> 0:05:59.200 they're very excited, and it's not necessarily regulation. 0:05:58.880 --> 0:06:00.560 Roll back, but let's rules. 0:06:00.560 --> 0:06:04.560 So the rule you're referring to is a new rule 0:06:04.920 --> 0:06:08.840 and it's more punitive for the biggest, biggest banks. So again, 0:06:08.920 --> 0:06:13.480 these capital markets focus banks, so less regulation, more revenue. 0:06:13.880 --> 0:06:17.040 We saw a twenty billion dollar buy back announced by 0:06:17.080 --> 0:06:21.200 City Group, fourteen percent of their market cap. Right, you 0:06:21.320 --> 0:06:24.520 saw you saw those shares rally. But that is another 0:06:24.560 --> 0:06:27.280 thing that investors are focused on because the banks happen 0:06:28.000 --> 0:06:31.320 hoarding capital, if you will, right, because they these when 0:06:31.320 --> 0:06:36.400 the rules were introduced, they were extremely I don't know 0:06:36.440 --> 0:06:38.719 if you want to say strict or punitive, but you 0:06:38.760 --> 0:06:40.839 know there we're going to need a lot of capital. 0:06:41.440 --> 0:06:44.279 As people started to feel that, okay, these are going 0:06:44.360 --> 0:06:47.880 to get watered down. There was you know, comment by 0:06:47.960 --> 0:06:50.400 Power that they're going to get watered down. So people 0:06:50.440 --> 0:06:52.520 felt a little bit better. But really that you know, 0:06:53.080 --> 0:06:56.880 post Trump, people became very excited. And now with Bars 0:06:56.880 --> 0:07:00.080 stepping down, you know, Bar was really one of the 0:07:00.120 --> 0:07:04.200 people that was looking for these banks to hold more capital. 0:07:04.240 --> 0:07:08.880 And so I think all of that positive momentum. Investors 0:07:08.920 --> 0:07:12.440 are more positive. But managements are also feeling better about Okay, 0:07:12.600 --> 0:07:14.840 you know, we may have we may feel better about 0:07:14.880 --> 0:07:15.760 the capital situation. 0:07:16.000 --> 0:07:19.040 That said a headline coming in you mentioned City City 0:07:19.080 --> 0:07:22.160 eliminating more jobs. This week, the bank games to reduce 0:07:22.240 --> 0:07:25.200 jobs by twenty thousand by the end of twenty twenty six, 0:07:25.280 --> 0:07:28.360 headcount currently two hundred and twenty nine thousand. How should 0:07:28.400 --> 0:07:30.240 we read into this? The story just breaking about ten. 0:07:30.160 --> 0:07:33.600 Minutes, So, I mean City Group and Walls Fargo are 0:07:33.600 --> 0:07:35.840 a little bit unique because they are dealing with some 0:07:35.880 --> 0:07:40.160 regulatory issues, right, So there's a couple of and there's 0:07:40.200 --> 0:07:43.720 a couple of things at City First they called the transformation, right. 0:07:43.640 --> 0:07:46.480 So just kind of about twenty seconds getting that in control. 0:07:47.200 --> 0:07:50.440 But then they are also refining their business and honing 0:07:50.480 --> 0:07:53.120 their business, right, and so focusing on the parts that 0:07:53.160 --> 0:07:54.120 are more profitable. 0:07:55.080 --> 0:07:57.120 We saw the severance charges at Wells. 0:07:57.160 --> 0:07:59.520 It's not surprising that we were kind of seeing continued 0:07:59.560 --> 0:08:01.000 honing the business at the City Group. 0:08:01.080 --> 0:08:03.400 All right, Yeah, they continue in terms of that transformation, 0:08:03.560 --> 0:08:06.040 all right, and City shares a little change in today's session. 0:08:06.080 --> 0:08:08.760 Alison Williams, thank you so much. Luck going on when 0:08:08.760 --> 0:08:10.800 it comes to the big banks. Senior at Global Bank 0:08:10.840 --> 0:08:13.920 Salist Here at Bloomberg Intelligence. 0:08:13.800 --> 0:08:17.520 You're listening to the Bloomberg Business Week podcast. Catch us 0:08:17.600 --> 0:08:20.120 live weekday afternoons from two to five these during that 0:08:20.320 --> 0:08:24.200 listen on Applecarplay and Android Otto with the Bloomberg Business app, 0:08:24.360 --> 0:08:26.120 or watch us live on YouTube. 0:08:27.360 --> 0:08:27.560 Well. 0:08:27.600 --> 0:08:30.360 The data are clear that the nation's current housing crisis 0:08:30.360 --> 0:08:32.560 stems from a lack of home building in the wake 0:08:32.679 --> 0:08:34.960 of the Great Recession more than a decade ago. Earlier 0:08:35.000 --> 0:08:38.280 this month, Bloomberg Opinion highlighting in a column how home 0:08:38.320 --> 0:08:41.480 construction never caught back up to the demand of a 0:08:41.480 --> 0:08:44.360 growing population. As a result, the United States has a 0:08:44.360 --> 0:08:47.040 shortage of about four and a half million homes. This 0:08:47.120 --> 0:08:50.480 is from Zillo data. Surveys published last year. Tim showed 0:08:50.559 --> 0:08:52.959 that more than half of all prospective home buyers were 0:08:53.080 --> 0:08:54.360 unable to make a move. 0:08:54.559 --> 0:08:57.120 Larry Connor is founder and managing partner of the Connor Group. 0:08:57.160 --> 0:08:59.800 It's a real estate investment firm that owns and operates 0:09:00.040 --> 0:09:02.760 luxury apartments and high growth markets throughout the South and 0:09:03.040 --> 0:09:05.720 the Midwest. The firm has more than five billion dollars 0:09:05.760 --> 0:09:09.960 dollars in assets under management. Larry joins us from Dayton, Ohio. Larry, 0:09:09.960 --> 0:09:12.679 good to have you with us. Just give us an 0:09:12.679 --> 0:09:17.160 idea of your footprint and when we say luxury, what 0:09:17.280 --> 0:09:19.480 sort of the demographic that your firm caters to. 0:09:20.720 --> 0:09:23.240 Sure? First off, thanks for having me. 0:09:23.320 --> 0:09:28.200 Yeah, we operated eighteen cities around the country. We go 0:09:28.240 --> 0:09:34.840 as far west as Phoenix, Denver, Texas, Florida, North Carolina, 0:09:34.920 --> 0:09:36.520 and obviously here. 0:09:36.360 --> 0:09:37.200 In the Midwest. 0:09:37.520 --> 0:09:43.880 And so generally it's going to be the renner by choice. 0:09:44.720 --> 0:09:51.640 But I would tell you the affordable housing crisis is real. Two, 0:09:53.360 --> 0:09:58.120 it's just not for example, on the coast, I think 0:09:58.160 --> 0:10:02.640 it's in every city across to America. But I believe 0:10:02.679 --> 0:10:08.880 the new administration absolutely has an opportunity to address this well. 0:10:09.000 --> 0:10:10.840 And I'm curious, well, how do you think that they 0:10:10.840 --> 0:10:13.600 should address it? Because I think some might say and 0:10:13.600 --> 0:10:15.880 I'm not being sassy here, so forgive me, but I 0:10:15.880 --> 0:10:19.240 know I'm going to get emails. You know, they would say, hey, Larry, 0:10:19.280 --> 0:10:22.520 you know what can a luxury real estate investor kind 0:10:22.520 --> 0:10:24.280 of really tell us about what needs to be done 0:10:24.280 --> 0:10:28.880 when it comes to affordable housing? So let's start there now. 0:10:28.960 --> 0:10:32.120 I think that's a fair question, Carol. So I would 0:10:32.160 --> 0:10:35.360 have three thoughts. And by the way, the backdrop is 0:10:37.720 --> 0:10:44.439 the new administration has the opportunity to unleash the power 0:10:45.120 --> 0:10:51.920 of America's free enterprise. The problem is the economics. 0:10:51.160 --> 0:10:53.240 Don't work for these developers. 0:10:53.679 --> 0:10:56.440 And I know a lot of developers who work with 0:10:56.800 --> 0:11:01.480 even though we don't develop properties, and say, okay, how 0:11:01.600 --> 0:11:07.800 so three ways. Number one, common sense regulations. Let me 0:11:07.840 --> 0:11:10.640 give you just one example. In California. 0:11:10.720 --> 0:11:11.199 There was a. 0:11:11.200 --> 0:11:18.199 Recent research paper approximately thirty percent of the total cost 0:11:18.600 --> 0:11:22.720 of a new home in California is based upon permitting 0:11:23.080 --> 0:11:24.040 and red tape. 0:11:24.840 --> 0:11:27.160 That's not good, Okay. 0:11:27.080 --> 0:11:29.880 Yeah, that's an issue that has been talked a lot 0:11:29.920 --> 0:11:31.559 about too in the wake of the fires, and even 0:11:31.600 --> 0:11:33.680 the governor suspending some of that red tape to try 0:11:33.679 --> 0:11:35.800 to get this stuff rebuilt faster. Go ahead, Sorry, I 0:11:35.840 --> 0:11:36.560 just want to jump in. 0:11:36.640 --> 0:11:40.040 Yeah, Jim, You're absolutely right, and in California the same 0:11:40.120 --> 0:11:44.800 research it takes up to four years. Seven three pronged attack. 0:11:45.360 --> 0:11:51.160 Number One, common sense regulations. I think the Trump and administrations. 0:11:50.280 --> 0:11:51.280 Will equipped to do that. 0:11:51.640 --> 0:11:58.839 Second, create low interest costs moans, Third tax credits. But 0:11:59.040 --> 0:12:04.400 in return, put real teeth in the requirements that these developers. 0:12:04.760 --> 0:12:09.200 One build a quality product and two, over the long term, 0:12:09.760 --> 0:12:11.640 maintain it to high standards. 0:12:12.040 --> 0:12:14.800 So there, I hear what you're saying, and I think 0:12:14.800 --> 0:12:17.040 a lot of people watching and listening would agree that 0:12:17.280 --> 0:12:20.920 regulations are a huge issue. The challenge, though, is the 0:12:20.960 --> 0:12:24.280 federal government doesn't really have much control on the regulatory 0:12:24.320 --> 0:12:27.360 front when it comes to zoning rules, when it comes 0:12:27.400 --> 0:12:32.120 to environmental policy rules, environmental review rules in individual states. 0:12:33.360 --> 0:12:35.640 How do you make it work at a federal level 0:12:35.760 --> 0:12:37.200 if these are local issues? 0:12:38.320 --> 0:12:40.720 Yeah, fair statement, Tim. 0:12:40.760 --> 0:12:45.040 The reality is it's a federal problem, it's a state problem, 0:12:45.280 --> 0:12:49.520 and it's a local problem. But somebody has to start 0:12:50.360 --> 0:12:54.720 in the federal government, and the new administration, in my opinion, are. 0:12:54.720 --> 0:12:56.480 Uniquely positioned to do so. 0:12:56.760 --> 0:13:00.560 For example, let's go to the low interest rate instead 0:13:00.559 --> 0:13:04.160 of borrowing costs for these developers at seven or eight 0:13:04.160 --> 0:13:07.160 percent create an environment where they can do it at 0:13:07.160 --> 0:13:11.120 three or four percent. Now suddenly the economics work and 0:13:11.200 --> 0:13:16.760 developers will develop tax credits. Every deal project you do, 0:13:16.800 --> 0:13:20.160 you need a down payment, tax credits can help fund them. 0:13:20.679 --> 0:13:23.880 If you do that, developers will do it. 0:13:23.960 --> 0:13:26.720 But again, you've got to build a safety and out 0:13:26.760 --> 0:13:27.800 of regulations. 0:13:27.960 --> 0:13:30.760 Larry, why do developers always need tax breaks? I mean, 0:13:30.800 --> 0:13:32.600 you're not going to build an areas where you're not 0:13:32.679 --> 0:13:34.920 going to be able to sell properties, right, You're not 0:13:34.920 --> 0:13:36.320 going to do that because it would be a bad 0:13:36.360 --> 0:13:39.840 business decision. So I'm not sure I ever completely get this. 0:13:39.920 --> 0:13:42.280 I mean I think, why don't we give tax breaks 0:13:42.280 --> 0:13:44.760 to the homeowners that actually buy it and send them 0:13:45.200 --> 0:13:47.120 to do it even more and to kind of make 0:13:47.120 --> 0:13:49.160 it even possible. We know that when you know a 0:13:49.160 --> 0:13:51.560 homeowner buys a home, you know they're going to buy 0:13:51.559 --> 0:13:53.479 a lot of other things. There's a lot of economic 0:13:53.559 --> 0:13:57.599 activity that is rest that is created as a result. 0:13:58.200 --> 0:13:59.160 Good question, Carol. 0:13:59.240 --> 0:14:01.679 Two part answer or number one is I agree, give 0:14:01.760 --> 0:14:04.480 the home owner some tax breaks. 0:14:04.720 --> 0:14:06.520 Here's why tax credits. 0:14:06.960 --> 0:14:10.480 So you're going to build a project in wherever in 0:14:10.559 --> 0:14:13.240 Ohio and Cincinnati, Ohio. 0:14:13.520 --> 0:14:15.000 Well, if you get a loan. 0:14:15.679 --> 0:14:20.280 Let's say through Fannie Mae freddie Man that loan is 0:14:20.320 --> 0:14:22.920 only under cover let's call it seventy five percent of 0:14:22.960 --> 0:14:23.440 your cost. 0:14:24.440 --> 0:14:25.960 Well, you have to come up with. 0:14:25.920 --> 0:14:29.640 A twenty five percent down payment. A lot of developers 0:14:29.720 --> 0:14:34.560 can't come up with that. Tax credits you can actually monetize. 0:14:35.120 --> 0:14:37.040 You can go out and sell. 0:14:36.800 --> 0:14:41.760 Those to investors who will buy those net net you 0:14:41.840 --> 0:14:44.840 can pay for maybe not all, but maybe half to 0:14:44.880 --> 0:14:46.040 two thirds. 0:14:45.880 --> 0:14:46.840 Of your down payment. 0:14:47.120 --> 0:14:50.480 That's why, again, you come back to the realities. You 0:14:50.600 --> 0:14:53.760 got to make the economics work. If you do, you're 0:14:53.760 --> 0:14:57.080 going to unleash the power of all these developers. 0:14:57.560 --> 0:15:00.160 So only got about a minute and a half for 0:15:00.200 --> 0:15:02.240 so left thirty seconds. I want to ask you, though, 0:15:02.280 --> 0:15:04.640 if you could change one thing that you think would 0:15:04.680 --> 0:15:08.480 really create affordable housing, and it's not just affordable housing, 0:15:08.520 --> 0:15:11.120 but affordable housing in major cities like New York and 0:15:11.280 --> 0:15:16.239 LA where it's expensive and they're needed in those locations, 0:15:16.320 --> 0:15:19.000 not just anywhere where people who maybe don't make a 0:15:19.040 --> 0:15:20.760 lot of money, but they work in New York City 0:15:20.800 --> 0:15:23.360 and they need a place to live. One change, thirty seconds, 0:15:23.400 --> 0:15:23.880 what would it. 0:15:23.840 --> 0:15:30.920 Be, reduce the cost and create the economics for it 0:15:31.000 --> 0:15:31.400 to work. 0:15:33.320 --> 0:15:36.480 Larry, I like that answer because it was short and 0:15:36.480 --> 0:15:38.200 it gives me time to ask about your mission to 0:15:38.280 --> 0:15:41.400 space back in twenty twenty two. With the one minute 0:15:41.400 --> 0:15:44.440 we do have left. Well, give us your outlook on 0:15:44.720 --> 0:15:50.280 NASA under the next administration and the role of private investors, 0:15:50.360 --> 0:15:53.160 and the role of private companies such as SpaceX Axiom, 0:15:53.240 --> 0:15:56.640 the company you went with to space to the ISS. 0:15:56.840 --> 0:15:58.760 What's your view over the next four years when it 0:15:58.800 --> 0:16:01.120 comes to the US role in the Cosmos. 0:16:03.200 --> 0:16:07.680 Well, if you ask my opinion, the future is space 0:16:08.480 --> 0:16:13.080 and it's important that the United States lead in control space. Second, 0:16:13.760 --> 0:16:17.440 I think again, you partner the private sector with the 0:16:17.440 --> 0:16:20.400 public sector, and the power of being. 0:16:20.240 --> 0:16:22.240 Able to do that can be unbelievable. 0:16:22.480 --> 0:16:28.400 Me personally, I was fortunate seventeen days in space extraordinary. Well, 0:16:28.400 --> 0:16:31.160 what's not known is that ten months of full trying 0:16:31.600 --> 0:16:33.520 training behind the scenes. 0:16:33.960 --> 0:16:35.360 We are not space tours. 0:16:35.640 --> 0:16:38.960 We were private astronauts who had to meet or exceed 0:16:39.320 --> 0:16:43.479 most of them NASA astronaut requirements. 0:16:43.560 --> 0:16:45.160 All Right, we got to leave it on that note, Lard. 0:16:45.200 --> 0:16:47.160 Great to get some time with you. Larry Connor, founder 0:16:47.200 --> 0:16:48.640 imaging partner of the Connor Group. 0:16:51.200 --> 0:16:54.880 This is The Bloomberg Business Week podcast. Listen live each 0:16:54.880 --> 0:16:58.280 weekday starting at two pm Eastern on Applecarplay and Android 0:16:58.320 --> 0:17:01.680 Otto with the Bloomberg Business You can also listen live 0:17:01.760 --> 0:17:05.320 on Amazon Alexa from our flagship New York station, Just 0:17:05.400 --> 0:17:09.440 Say Alexa Play Bloomberg eleven thirty Well. 0:17:09.520 --> 0:17:12.639 Treasury Secretary nominee Scott Bessen warned that the US space 0:17:12.720 --> 0:17:15.840 is an economic crisis that will hammer middle in working 0:17:15.840 --> 0:17:18.720 class people if the twenty seventeen Republican tax cuts are 0:17:18.720 --> 0:17:21.280 not extended when a swath of them expire at the 0:17:21.359 --> 0:17:24.400 end of this year. Bessent making these comments answering questions 0:17:24.400 --> 0:17:27.879 at his Senate Finance Committee confirmation hearing today. He also 0:17:27.960 --> 0:17:30.679 touched on the independence of the FED during that hearing. 0:17:31.280 --> 0:17:34.800 I'm asking you, but let me just say, but you 0:17:34.800 --> 0:17:37.600 don't deviate from our conversation that you think that there 0:17:37.600 --> 0:17:38.560 should be independence. 0:17:38.960 --> 0:17:43.920 I think on monetary policy decisions, the FOMC should be independent. 0:17:44.200 --> 0:17:44.560 Thank you. 0:17:44.720 --> 0:17:45.480 I appreciate that. 0:17:46.040 --> 0:17:47.920 Indeed, here at Bloomberg, we've been talking a lot about 0:17:47.920 --> 0:17:50.560 Scott Besson in recent months, Yet for many people he 0:17:50.640 --> 0:17:53.639 wasn't a familiar name, especially those in Republican political circles 0:17:53.640 --> 0:17:57.960 before Donald Trump nominated him to be Treasury Secretary. Still 0:17:58.000 --> 0:18:00.200 is Bloomberg Business Wee columnist Josh Green, Right, it's the 0:18:00.240 --> 0:18:03.840 macro hedge fund executive beat out several rival contenders to 0:18:03.880 --> 0:18:05.840 get the nod for one of the most powerful jobs 0:18:05.840 --> 0:18:09.240 in global economics and finance. He managed to convince both 0:18:09.280 --> 0:18:13.000 Maga populist and Wall Street that he was on their side. 0:18:13.040 --> 0:18:15.920 Josh Green is a Bloomberg BusinessWeek national correspondent. He's also 0:18:15.920 --> 0:18:18.399 the author of several books, including the number one New 0:18:18.480 --> 0:18:21.560 York Times bestseller Devil's Bargain, Steve bann and Donald Trump 0:18:21.600 --> 0:18:23.840 and the Storming of the Presidency, as well as The 0:18:23.880 --> 0:18:27.480 Rebels Elizabeth Warren, Bernie Sanders, AOC and The Rise of 0:18:27.520 --> 0:18:32.040 the New Left. Josh joins us from Washington, d C. Josh, 0:18:32.160 --> 0:18:34.720 I had no idea Steve Bannon was such an integral 0:18:34.760 --> 0:18:42.000 part of Scott Besson's sort of rise in Republican Circles. 0:18:42.040 --> 0:18:45.719 Explain the relationship there and what Besson did during the 0:18:45.760 --> 0:18:48.600 first Trump presidency and then over the last four years. 0:18:49.840 --> 0:18:52.880 Yeah, Steve Besson is. Sorry, Steve Bannon is. He's kind 0:18:52.880 --> 0:18:55.639 of like a Maga Forrest Gump. He just sort of 0:18:55.680 --> 0:18:59.919 shows up and everywhere and everybody. But as I wrote 0:19:00.560 --> 0:19:03.359 in Bloomberg News this week, with my colleague Soleia Mosen, 0:19:03.400 --> 0:19:07.160 we did a big profile of Scott Bessont, the likely 0:19:07.240 --> 0:19:11.080 next next Treasury secretary, basically trying to answer the question 0:19:11.160 --> 0:19:13.000 like who is this guy and where did he come from? 0:19:13.680 --> 0:19:16.920 I was watching an event at mar a Lago earlier 0:19:16.960 --> 0:19:21.119 this month, and Trump on stage kind of just stood up. 0:19:21.119 --> 0:19:24.080 There was like musing to the crowd like, Hey, there's 0:19:24.119 --> 0:19:26.560 Scott Besson Who's ever heard of this guy? And it 0:19:26.640 --> 0:19:28.879 sort of struck me as like that that really is 0:19:28.880 --> 0:19:31.040 a question to answer about Besstt, And of course this 0:19:31.119 --> 0:19:33.320 is what senators are trying to find out. We're trying 0:19:33.359 --> 0:19:36.200 to find out the hearings this morning, Bannon came into 0:19:36.200 --> 0:19:38.640 the picture because Bessentt, for most of his career had 0:19:38.680 --> 0:19:42.639 been a low profile but very well regarded hedge fund 0:19:42.640 --> 0:19:47.040 manager for George Soros's fund. In twenty fifteen twenty sixteen, 0:19:47.680 --> 0:19:50.160 he launched out on his own. A Key Square Group 0:19:50.240 --> 0:19:55.400 was his hedge fund, and shortly after Trump's inauguration in 0:19:55.560 --> 0:19:59.360 twenty seventeen. Bessen is a macroad bester, which is very 0:19:59.400 --> 0:20:02.399 curious to learn about these new forces of populism that 0:20:02.440 --> 0:20:05.919 are obviously royaling governments and markets across the world, and 0:20:06.080 --> 0:20:09.800 wound up paying to attend to Credit Lionee conference in 0:20:09.880 --> 0:20:12.600 Hong Kong, where he sat next to Steve Bannon, who 0:20:12.600 --> 0:20:16.479 had recently left the White House, and from what Bannon describes, 0:20:16.520 --> 0:20:20.119 they basically had a two day debrief on all things 0:20:20.160 --> 0:20:23.120 Trump and have been in touch ever since. And when 0:20:23.200 --> 0:20:25.719 Besson made up his mind that he wanted to have 0:20:25.800 --> 0:20:29.680 a position in the Trump administration, Bannon was one of 0:20:29.720 --> 0:20:32.320 the people in his ear helping advise him how to 0:20:32.400 --> 0:20:34.240 land the Treasury secretary role. 0:20:34.680 --> 0:20:36.320 You know, I think about this, Josh. 0:20:36.440 --> 0:20:39.479 There are a lot of politicians out there, individuals who 0:20:39.600 --> 0:20:42.240 kind of start to align themselves or start to play 0:20:42.320 --> 0:20:44.800 to Donald Trump. But what was it what's so unique 0:20:44.800 --> 0:20:48.320 about what Besson did that really made him such a 0:20:48.359 --> 0:20:51.159 standout to ultimately get one of the top jobs, or 0:20:51.160 --> 0:20:53.399 at least nominated for one of the top jobs in 0:20:53.440 --> 0:20:55.560 this administration upcoming administration. 0:20:56.040 --> 0:20:58.119 You know what stood out to me about him, and 0:20:58.119 --> 0:21:01.120 I think Sileia, my co author, also was that what 0:21:01.160 --> 0:21:04.920 you've tended to see across two Trump administrations is that, uh, 0:21:04.960 --> 0:21:08.320 the key figures tend to either come from the traditional 0:21:08.359 --> 0:21:12.000 world of Wall Street or GOP politics, or they come 0:21:12.040 --> 0:21:15.760